Little Follow Through On Early USD/Asia Downside

USD/Asia pairs are mixed today, with a firmer USD tone unfolding as the session progressed, although pairs remain very much within recent ranges. USD/CNH sits back close to 7.3000, a mixed PMI backdrop offset by lower onshore equities. THB is a clear outperformer the other way. India Q2 GDP is still to come today. Tomorrow the China Caixin manufacturing PMI prints, along with South Korean trade data. PMIs print elsewhere in the region.

• USD/CNH is holding near 7.3000 currently, earlier lows were just under 7.2870. We remain very much within recent ranges. The mixed PMI results, with manufacturing surprising on the upside, versus a modest downside surprise from services hasn't shifted the sentiment needle a great deal. We did see some initial USD selling (on the manufacturing beat), but there wasn't any follow through. Local equities are struggling for positive traction at this stage (CSI down around -0.55%), with the real estate index a notable drag, despite eased mortgage restrictions in some mega cities.
• After making fresh highs in late NY trade on Wednesday (near 7.8480), USD/HKD has seen more two-way price action today. The pair pulled back towards 7.8440, before settling back closer to 7.8460 in recent dealings. Spot dips sub 7.8440 have generally been supported in recent sessions. Hibor 1 month fixed lower today, back under 3.72%, we did fix slightly higher yesterday (3.76%). The 3 month was also fixed lower, 4.45%, versus 4.48% yesterday. US-HK short end yield differentials have started to stabilize though, with US 3 month edging down this past week, weighed by weaker US data outcomes.
• USD/PHP is sticking to recent ranges in the first part of dealing today. The pair is back close to 56.75 (earlier lows were at 56.575), little changed on closing levels from yesterday. The pair is above all key EMAs, with the 20-day closest on the downside near 56.31. Mid-August highs rest close to ~57.00, although in recent weeks we have capped out around 56.90. PHP is tracking comfortably lower for August. Outside of broader USD trends, the weaker local equity backdrop has also likely weighed on PHP. The PSEi is down 5.5% for August with weaker economic activity and signs of slowing bank lending headwinds.
• The Rupee has opened dealing marginally firmer on Thursday, USD/INR is down ~0.1% and last prints at 82.6750/82.68. The pair was little changed yesterday as narrow ranges continue to persist, see-sawing around the 20-Day EMA (82.6868). Q2 GDP is on the wires today, a rise of 7.8% Y/Y is expected this is the largest increase since Q2 2022 with growth ticking higher from 6.1% in Q1. Economists say lower commodity prices helped manufacturers increase margins and offset the impact of 250 basis points of cumulative interest rate increases since May 2022.
• USD/MYR printed its lowest level since 17 August yesterday as the pair continues to trim August's gain. The pair closed dealing at 4.6385, after falling ~0.2% yesterday. A reminder that onshore markets are closed today for the observance of a national holiday.
• Baht is the strongest performer in the Asian FX space so far today. USD/THB is down 0.50% at this stage to 34.90/95 (after closing yesterday near 35.10). Support was evident on an earlier dip to 34.89. Ther 20-day EMA is at 35.02, although recent moves sub this support level haven't been sustained. Note as well, the 50-day EMA isn't too far away at 34.87. New PM Srettha has stated the qualification/vetting process for the new cabinet should be completed by tomorrow.
• The SGD NEER (per Goldman Sachs estimates) is marginally firmer in early dealing and has consolidated August's gains in recent dealing. The measure is ~0.4% below the top of the band. Broader USD trends continue to dominate flows for USD/SGD, the pair was pressured in yesterday's NY session after the US GDP print before support came in ahead of the 200-Day EMA ($1.3480.) On the wires this morning July M1 Money Supply fell 7.9% Y/Y and M2 Money Supply rose 3.1% Y/Y.